Giving Gift Cards as Holiday Gifts

Many people are buying gift cards as holiday gifts. I read somewhere that gift cards will account for something like 30% of the gift spending this holiday season. Apparently financial services companies and retailers are catching on and trying to make some money on this trend. American Express, Discover, and some banks sell gift cards that can be used in multiple places, but they add on purchase fees, shipping fees, inactivity fees, etc. and make it really expensive if you didn’t pay attention to the fine prints. Gift cards issued by a specific retailer have fewer fees but they can be used only at that retailer. There must be a percentage of gift cards that end up not being used, so called breakage, just like unclaimed rebates, that fall directly to the retailer’s bottom line.

This Wall Street Journal article, Cash: a Gift Unrestricted, says cash is the ultimate gift card. Come to think about it, it really is. There are no fees for giving cash and cash can be used on anything. Why do you want to give something with so many strings attached? If you look at the chart referenced in that Wall Street Journal article, you might want to think twice before you buy a gift card. I think giving cash (or check) is a great idea. It’s more likely to be used on something more useful than gift cards.

You think giving cash is too cold? If you must buy a gift card, consider buying from a place that has broad selection with good prices. I think Amazon.com gift certificate is one of the best, because:

  1. You can find many items on Amazon, from books, electronics, to sheets, shoes, diapers and even breakfast cereals.
  2. Prices are good, especially if you factor in zero sales tax to many states. It’s very easy to qualify for free shipping.
  3. 30-day price guarantee. If Amazon lowers their price in 30 days after your order, send them a message and they will refund the difference. Register your items with RefundPlease and they will track it for you.
  4. The Amazon.com gift certificate are very easy to use. The recipient adds the gift certificate code to their account and Amazon will automatically use it as the default payment method for their next order.

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